Medicare isn’t free – and in 2021, it will be even more expensive. The 2021 Medicare costs have been announced, and seniors can expect to pay a little more in the coming year.
2021 Medicare Part B Costs
CMS has announced the 2021 premiums, deductibles and coinsurance amounts that Medicare enrollees will be responsible for in 2021.
The standard Medicare Part B premium will be $148.50 in 2021. This is an increase of $3.90 from the 2020 amount of $144.60. This premium applies to individuals who earn $88,000 or less and couples filing joint tax returns who earn $176,000 or less. Medicare beneficiaries who earn more than these cutoff amounts will be charged higher Medicare Part B premiums based on their income bracket.
The Medicare Part B deductible is also increasing. In 2020, the Medicare Part B deductible was $198. In 2021, it will be $203, an increase of $5.
2021 Medicare Part A Costs
Although beneficiaries have to pay a premium for Medicare Part B coverage, CMS says that approximately 99% of Medicare beneficiaries do not pay a premium for Medicare Part A because they qualify for premium-free coverage through their work and tax history. However, beneficiaries are still responsible for certain out-of-pocket costs for Part A coverage, and these will increase slightly for 2021.
In 2021, the Medicare Part A inpatient hospital deductible will be $1,484. In 2020, the deductible was $1,408. The daily coinsurance for the 61st to 90th days is increasing from $352 in 2020 to $371 in 2021; the daily coinsurance for lifetime reserve days is increasing from $704 to $742, and the skilled nursing facility coinsurance is increasing from $176 to $185.50.
The 2021 Social Security Cost of Living Adjustment
Like Medicare costs, Social Security benefits are adjusted each year. This is important because many seniors are living on a fixed income, and they often have their Medicare premiums taken out of their Social Security benefits. Sometimes, a Medicare premium increase can essentially cancel out a Social Security benefit increase.
The good news is that the monthly benefit won’t actually go down, at least not typically. The Hold Harmless provision protects Medicare beneficiaries from premium increases that are greater than that year’s Social Security increase. Nevertheless, seniors might end up with little to nothing extra after Medicare premiums increases are accounted for.
The Social Security Administration has said that the cost of living adjustment (COLA) for 2021 will be 1.3%. The average monthly benefit for all retired workers before the COLA is $1,523, and the average monthly benefit after the COLA will be $1,543. This means that the average retiree will receive $20 more in 2021, although individuals may receive smaller or larger increases.
Even if you’re enrolled in Medicare Advantage, you should take note of the Medicare Part B premium increases. This is because seniors who enroll in Medicare Advantage are responsible for the Medicare Part B premium as well as any additional premium charged by the plan.
However, there is a bright light. CMS says that Medicare Advantage plan premiums are expected to decrease 34.2% since 2017, while plan choices and benefits are increasing. Some plans have $0 premiums.